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11/09/2010

Utah looks to cut back on deer hunt

Baseball may be America’s pastime, but for many Utah residents, hunting deer is a way of life. However, a recent news release from the Utah Division of Wildlife Resources (DWR) indicates that Utah hunters may find it more difficult to draw a hunting tag for bucks next year.

This new policy is being considered due to the relatively short supply of bucks found within the deer population. If Utah continues to harvest bucks at its current rate, authorities fear that the deer population will greatly decrease as too few bucks will remain to sustain the population.

Thus far, it appears that the DWR is only contemplating reducing next year’s available tags by 7,000 (94,000-87,000). The reduction in tags may cause an amount of upheaval amongst residents as completion for said tags may become fierce.

Another idea which the DWR may want to consider is raising the price for tags. As explained in supply and demand graphs, when the price is raised, all other things held equal, the demand will decrease.

I believe that if the herd ratio is the true issue, the DWR may save itself some problems if it merely raises the price for tags. Thus, residents not willing to pay the higher price will self select out and while those who truly value the hunt may still participate.

10 comments:

This is actually an interesting look at economics. The Utah DWR gets all of its revenue from license sales. They get a lot of grief for running the Division like a business where they are simply concerned about profits and not concerned with providing a quality experience for those that enjoy the outdoors. They have a perfect monopoly on licenses; you simply can't get a Utah license from anywhere but the Division. They also practice discriminatory pricing in that they charge less for a resident tag then a non-resident. Tags are already a hot commodity in this state and most are only available through a draw system for one of the limited number available. Simple economics would dictate that to reduce demand you simply need to raise prices, especially when operating as a monopoly. For all the grief the Division gets for operating as a business, it appears that it simply isn't true. If they were truly operating to maximize pofits at the expense of experience, license prices would go through the roof.

As an economist, I see your point: limiting quantity or raising the price can get us to the same point.

Politically though, raising the price won't fly. It will be labeled as favoring the rich. So, I think the DWR is on the right track.

Rico has made a nice addition about the price discrimination practiced by the DWR.

But ... not so much about prices going through the roof if allowed to. Monopolists raise prices, but only as high as they need to maximize profits. It isn't clear at all how high that would be, or even if it would be higher than it is currently.

Another problem with attempting to set a high enough price to reduce demand to a desired level is determining the appropriate price. Clearly the market is currently not in equilibrium as demand far exceeds the supply at the current price. It is very likely that the true equilibrium price would be very high and difficult to determine. The only way to do it with certainty would be to auction off a set number of tags to the highest bidder which would probably result in even more displeasure in the hunting community and as Dr Tufte pointed out be seen as favoring the rich.

Dave, I have to defend my position on "through the roof." While it is certainly a relative term, there is plenty of evidence that tag prices would increase substantially if the Utah DWR raised prices to a profit maximizing level. For example, Denny Austad paid $170,000 at auction for the Govenor's Elk Tag when a standard over the counter elk tag is about $70 total. Obviously this is a massive gap and the profit maximizing price is somewhere in between. Tag prices going "through the roof" are quite possible.

Hunting deer is not entirely monopolistic. Utah is in direct competition with many other western states that offer similar hunting experiences. Colorado allows non-residents to hunt deer for about $350. They also manage areas for bigger bucks and larger quantities. Utah's deer quality has more to do with management issues, rather than financial issues. Sincere hunters realize that there simply isn't enough deer to satisfy the demand. Utah has to decrease tags to increase the deer population. They already use several methods of price discrimination. If they can argue that increased prices will directly increase deer numbers, then they would have a legitimate argument for price increases.

I think that the DWR has to walk a fine line with this issue. By cutting tags and rising prices, they will cause an uproar with hunters. By allowing the number of tags to remain constant without adjusting prices, hunters will be happy but the deer population will continue to dwindle. This is a tough decision.Another issues that the DWR needs to realize is that by cutting tags and increasing prices it will create losses in other forms of direct and indirect revenue for the state like camping fees/rentals, travel, and hunting equipment sales.

Everyone will have a different perspective on this one. I think Rico is correct in his 'economic' view of the pricing or restriction of the number of deer tags. I think that raising prices to help control the number of deer taken is correct. I also think that in spite of people not being happy with the increase of price, the DWR has to be run as a business. Looking at situation from a management perspective, I think the raising of prices is essential. A supplier, when faced with a shortage of goods that are to be sold, will not reduce quantity sold but will raise the price to the level that reduces the quantity sold. In this manner they can continue to keep a supply, although limited. Purchasing a deer tag is a luxury, not a necessity.

While the DDW is actively involved in measures to ensure sustainability of the state’s deer herd, the goals of the proposed changes are not to increase the population of deer but to increase the buck/doe ratio from 15:100 to 18:100. From a supplier’s perspective, I think this is less about a shortage of deer and more about product improvement. Although less hunting permits will be offered, the hunters who obtain a permit will be offered more opportunity and selection which will result in a better hunting experience. In a typical market, the resulting increase in value would translate into higher prices.

I agree with Dave. Raising the price of a deer tag is a form of favoring the rich. There are enough people with money that can and will pay higher prices for a tag. In my opinion Nikki is correct. The problem lies in a shortage of deer. The division has to walk a very fine line. It needs to show the public that it cares and is trying to help. If their solution to increasing the deer numbers is to raise the prices of tags to the point where only a select few could afford to hunt, I feel that a lot of hunters would hunt without a tag. If hunters feel that the division cares and is looking out for their best interests, they will be more willing to wait a yeah or two to get a tag.